Social democracy post-Pasok
The Greeks have voted, showing a country that is heavily polarised between pro and the anti-bailout opinion, with Pasok, the socialist party, in a very difficult situation, its consensus having reached an absolute minimum.
Pasok is guilty of having failed to manage a complex situation that it did not create. Meanwhile the success of the neo-Nazi party, Golden Dawn, is worrying; particularly bearing in mind that Greece was ruled by a military dictatorship from 1967 to 1974.
Samaras, the newly elected centre-right prime minister, would have liked Syriza to join the coaltion, but the extreme left, anti-bailout party has rejected the offer. Pasok has also replied with strict conditions for entering the coalition; a symptom of how difficult it must be for the Greek socialists now, suffering the defection of many of its members and voters to Syriza.
With Greece busy forming a coalition, it would be good news if Germany, as suggested by its foreign minister Guido Westerwelle earlier this week, decided to renegotiate the time frame for the Greeks to deliver reforms, while not relinquishing their austerity measures. At the G20 in Mexico, both President Obama and Chinese premier Hu Jintao piled the pressure on the German chancellor, saying that there is no way forward without policies that are able to stimulate demand and create growth.
At the same time, the Italian prime minister and French president are proposing that the European Financial Stability Facility (EFSF), whose mandate is to safeguard financial stability in Europe by providing financial assistance to euro area member states, could be used to help relieve market pressures on the continent so that, as Hollande put it, ‘virtuous countries, like Italy, can have financing for their sovereign debt that isn’t at interest rates like those for countries that are seen as not having made efforts’.
Unsurprisingly, as she was leaving Los Cabos, the German chancellor denied there had been any talk of using the EFSF to buy euro-zone sovereign debt on the secondary markets. Just as she had previously denied the possibility to renegotiate with Greece the time frame for the reforms.
If only Germany’s attitude were to embrace change, as everyone hopes, we would be prepared for some positive news ahead of the 28–29 June European Summit.
But perhaps we are expecting too much from Europe’s conservatives.
Instead, we should be channelling our energy into the creation of what Ed Miliband calls a pan-European alliance, rooted in long-term deficit reduction, short term stimuli and strong policies for growth.
This must entail a number of coordinated actions: resources for the European Investment Bank need to be increased dramatically to boost private sector investments, as small and medium businesses cry out for credit; project bonds must be issued to boost European infrastructure programmes; together with investments in the digital economy, transport and energy. A new role for the European Central Bank – as the main lender – needs to be defined, and Eurobonds issued.
Angela Merkel will push for further fiscal union, and French president Francois Hollande, strengthened by an overwhelming parliamentary majority obtained last Sunday, will have to override French reluctance on this matter.
Most importantly, European leaders will have to decide whether they want a political union. When Europe was born, it was very much the work of a bunch of technocrats, albeit motivated by the noblest reasons, to create peace after the ravages of the World War II and Hitler’s atrocities.
Without a political Europe, it will still remain a matter for technocrats, and technocrats do continue to have a large say in both European and financial institutions. Christine Lagarde is living proof of how out of touch technocrats can be: she has stated that she does not feel any empathy for Greek people because they have not paid their taxes. She should be reminded that, as an IMF employee, she does not pay tax herself, despite earning a high salary.
I feel that if Europe does not speak about politics, and about what holds its countries together beyond financial rescues and fiscal policies, it will not appeal to people.
Now is the time for bold politics, and only our social democrats can lead the way to a bold new vision of Europe, able to restore the original spirit of the Lisbon agenda, whose underpinning principle — that economic and social goals must be closely connected — has been abandoned. That process did not happen by chance but as the result of right-wing smothering, which has made citizens feel they cannot hope for any greater social protection.
A social-democratic Europe is what I believe the Labour movement should support. We may not agree with some of what our socialist colleagues say, but surely Ed Miliband’s call for a radical plan to reform capitalism; to make it work for working people, is shared by many men and women across our continent.